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BT reported Q3 revenue growth of 2% across the group driving a faster growth of 8% in EBITDA and eps up 12%, showing a definite improvement on the Q2 results.
In Retail, attention remains focused on BT Sport and its positive effect on fibre and broadband penetration. BT had a record quarter pushing fibre subscriber numbers to 1.9m, so the approach seems to be working. Also in Retail, the recently separated Business division generated 6% growth in IT services sales, twice the market growth, with sales to UK companies below the Global Services radar.
Q3 results from Global Services were affected by the timings of contract and order milestones. Revenue showed growth of 3% (flat for the nine months). Orders in the quarter were down over 20%, but for the nine months showed 4% growth, with international operations leading the way. Investment in AP, Mid-East and Africa was increased and the Latam operation is gaining momentum.
The UK outlook is dampened by management’s caution over public sector business, particularly in local government. (TechMarketView subscribers can see our latest report on Local Government here), Elsewhere there are positives, such as in Health, see here and with Alder Hey, and in growing areas where BT is strong such as Unified Communications and Collaboration. BT’s continues to act on costs, with a programme of insourcing jobs and harmonising operational processes across international operations.
The key question remains whether the recent cost-cutting has removed layers of complexity to enable the slimmed-down IT services operation to be more responsive to customer demands and price points. We also need to see more investment in capabilities to extend the portfolio and grow margin. Nevertheless, these results show some positives for the BT Group and its IT Services operation.
